By Chris Endicott
About seven years ago, Shelby Beil, VP and CFO and Technology Officer at TTCU Federal Credit Union in Tulsa, Okla., came to the realization that they weren’t serving their member’s mortgage needs a s well as they could.
“We were holding all mortgages in portfolio and, as a result, limiting our mortgage production in order to manage interest rate risk,” Shelby said.
About TTCU
The second largest credit union in Oklahoma, TTCU has assets of $1.8 billion and serves more than 128,000 members who are made up of teachers, school faculty, administrators, staff, students and others from more than 600 affiliated groups. They wanted to offer more of their members an avenue to purchase a home but couldn’t continue adding to their current portfolio without additional risk.
Weighing their Options
TTCU conducted an in-depth analysis into how to better meet their members’ mortgage needs.
“The FHLBank’s Mortgage Partnership Finance Program was far and away the best option,” Shelby said. The MPF Program is a conduit into the secondary market available through several Federal Home Loan Banks across the nation. TTCU participates in the MPF Program through their membership with FHLBank Topeka and sells both conventional fixed-rate and government mortgages into the program.
Exceptional Pricing and Fee Income
Compelling pricing was one reason TTCU chose the MPF Program.
“The pricing has been consistently better than other options, plus we don’t get dinged by loan-level price adjustments,” Shelby said. Sharing in the credit risk was also attractive to TTCU. “We felt good about the credit quality of our loans and appreciate the ongoing credit enhancement fee income we receive,” Shelby added. While each Participating Financial Institution (PFI) manages the credit risk, the FHLBank manages the liquidity, interest rate and prepayment risks of the loans.
Retain the Member Relationship
The MPF Program offers PFIs the choice of keeping the servicing or selling it. TTCU chose to retain their servicing. “There is a level of comfort in knowing FHLBank Topeka is the last destination for our mortgage loans,” said Shelby.
Evolving with the Market
Perhaps the most attractive part of the MPF Program to TTCU is the customer service they receive.
“The MPF Program is more of a partnership than other secondary market options,” Shelby said. “You have someone working with you every step of the way, and FHLBank is very open to feedback. We have a voice into features and improvements we’d like to see.” The MPF Program stays on top of trends in mortgage lending and responds with products that help participating credit unions to better serve their market.
Chris Endicott is with Federal home Loan BankTopeka. For info: www.fhlbmpf.com.